Tax implications when moving from Quebec to Ontario

Hi,

I've relocated with my whole family from QC to ON on October 1st this year. We left no assets, nor other ties with QC. As you may know, QC is using not only a dual tax system - provincial/federal (similar to all other provinces) but also two separate tax returns.

I'm concerned about the tax implications and I'd like to be better prepared when the tax time comes:

1. Is ON using a similar dual tax system (split between Federal and Provincial part of the tax), except that only one tax return is filled (aggregating the provincial-specific fields with Federal ones)?

2. How many tax returns will I have to fill for tax year 2010? Would it be only one (Ontario) or three (one QC, one federal/QC and one federal/ON).

3. Assuming that it should be for ON only, and also assuming that I already paid some tax in QC (which was splited in two on my paycheque - a portition for QC and the other for federal tax), then HOW do I state on the ON tax return the total tax paid so far?
Will I just copy the federal part of tax from QC return to ON return and consider the QC part as ON provincial part? But in such case, how will ON get its required tax from the province of QC? Will there be a sort of implicit/transparent transfers between provinces?

4. When I receive on March 2011 the latest tax slips (Releve-1 and T4) from my former QC employer, how will I translate the Releve-1 fields to ON specific fields? Are the people employed in ON also receiving 2 types of tax slips?

5. Assuming that I paid too much tax in QC (both federal and provincial) let's say due to the fact that I have worked during the first 4 months of 2010 only and the rest was parental leave. And the HR taxed me for those 4 months as if I would be earning the same for all the year. In such case, if the assumption #3 is true, then it won't be a problem at all to have on the ON tax return a balance to be refunded (even if technically, those tax money never arrived to ON)?

6. Besides the aspect #5, there will be for sure situations of refundable tax amounts simply due to the tax differential between QC and ON (with ON being in my favor). Right?

7. Is it possible to fill a QC and federal/QC tax return and state that you were not a resident of QC on Dec 31 2010? If yes, how would that be useful? Will they return to you all the taxes paid and then you can use them to balance the affairs with the other, federal/ON tax returns?

Thank you and sorry if it looks like too many questions - but I'm really concerned.

Don't worry. Just get an Ontario tax package (from any post office) and follow the instructions in the guide.

However, be sure to keep your first Ontario Notice of Assessment forever, and maybe some proof of when you moved. I did the same move, and 3 years later, Revenue Quebec sent me a very nasty registered letter demanding that I file a Quebec tax return or face harsh penalties. They thought I was still in Quebec (even though they sent the letter to Ontario...). When I explained I wasn't, they wanted a copy of my Notice of Assessment. After they received it, all was fine.

1. Yes and no. CAN and ON taxes are calculated separately, on the same set of forms, and you pay everything to CAN, which then sends it to ON.

2. Just ON.

3. It's on your T4 somewhere, and there's a line for it on the ON T1. CAN gets what it needs from QC and gives it to ON.

4. You don't need the RL-1. Everything is already on the T4.

5. No problem. Chances are you'll have a nice refund.

6. Right.

7. The QC return does have a box for province of residence, for whatever reason. When RQ demanded I file a QC return and I filed one with ON as province of residence, they called me up and asked why on earth I filed a QC return when my province of residence was ON. They then said they don't want it and sent it back to me. No, you can't get a refund from QC directly when you're resident in ON. You have to get it from CAN who gets it from QC.

Bubak, thank you very much for the explanations. Everything looks clear, except:

Originally Posted by bubak

3. It's on your T4 somewhere, and there's a line for it on the ON T1. CAN gets what it needs from QC and gives it to ON.

4. You don't need the RL-1. Everything is already on the T4.

That's the thing I don't understand. If I look on my 2009 T4 and RL1, the total tax paid (CAN+QC) is never shown on either of them. Each one shows the split part, i.e. T4 box 22 shows the federal tax deducted and RL1 box E the QC provincial tax paid.

For the new, ON 2010 tax return, I'll have to deal again with 2 tax slips. I guess I'll have to add the 2 amounts and declare the result in the box 22 of a "virtual T4" form. But you see, I cannot "lie" and invent a non-existent T4. Perhaps I just need to declare my employment income as a generic type of income (other income?) and forget about T4/RL1 alltogether?

Even with a T4, there are other issues, such as that part of EI which QC decided to pay separately, for QPIP (Quebec Parental Insurance Plan). It's not a big amount (less than 400/yr) but in order to be correct, I guess that it must pe added to the EI amount that T4 states. But again, wouldn't that look like "fabricated data"?

Enter the total of all the amounts shown in the "Income tax deducted" box from all of your Canadian information slips.

If you were not a resident of Quebec on December 31, 2009, but you had Quebec provincial income tax withheld from your income, also include those amounts on this line and attach your provincial information slips to your paper return.

This is from last year's Guide, but presumably 2010 will be similar.

So you don't "invent" a T4, but you add your T4 and RL1 tax deducted and put it on Line 437.

There is similar stuff about CPP/QPP and EI on Lines 448 and 450.

The trick is to read through the guide carefully and especially look for all the parts that say "if you were not a resident of Quebec".

Ok, from a tax act/guide perspective it's very clear (nice of CRA to mention about QC as special case in certain lines). Thanks for pointing that, it makes sense.

What was not clear was from the perspective of using a tax prep software such as QuickTax, which "intelligently" extracts data from user input (in a more friendly way/wizard) such as tax slips. And in apps like those, you're first being asked for which province you wish to fill out. And once you choose ON, for sure that wizard will disable the possibility of entering QC-specific slips such as RL-1.
But perhaps I'm wrong - I'll need to do some simulation to see exactly.

What was not clear was from the perspective of using a tax prep software such as QuickTax, which "intelligently" extracts data from user input (in a more friendly way/wizard) such as tax slips. And in apps like those, you're first being asked for which province you wish to fill out. And once you choose ON, for sure that wizard will disable the possibility of entering QC-specific slips such as RL-1.
But perhaps I'm wrong - I'll need to do some simulation to see exactly.

I know uFile has an option for "T4 income earned in Quebec" which will allow you to enter the T4 and RL-1 forms despite not being a Quebec resident